Industry self-regulation is the process whereby members of an industry, trade or sector of the economy monitor their own adherence to legal, ethical, or safety standards, rather than have an outside, independent agency such as a third party entity or governmental regulator monitor and enforce those standards.[1] Self-regulation may ease compliance and ownership of standards, but it can also give rise to conflicts of interest. If any organization, such as a corporation or government bureaucracy, is asked to eliminate unethical behavior within their own group, it may be in their interest in the short run to eliminate the appearance of unethical behavior, rather than the behavior itself, by keeping any ethical breaches hidden, instead of exposing and correcting them. An exception occurs when the ethical breach is already known by the public. In that case, it could be in the group's interest to end the ethical problem to which the public has knowledge, but keep remaining breaches hidden. Another exception would occur in industry sectors with varied membership, such as international brands together with small and medium size companies where the brand owners would have an interest to protect the joint sector reputation by issuing together self-regulation so as to avoid smaller companies with less resources causing damage out of ignorance. Similarly, the reliability of a professional group such as lawyers and journalists could make ethical rules work satisfactorily as a self-regulation if they were a pre-condition for adherence of new members.[citation needed]
An organization can maintain control over the standards to which they are held by successfully self-regulating. If they can keep the public from becoming aware of their internal problems, this also serves in place of a public relations campaign to repair such damage. The cost of setting up an external enforcement mechanism is avoided. If the self-regulation can avoid reputational damage and related risks to all actors in the industry, this would be a powerful incentive for a pro-active self-regulation [without the necessity to assume it is to hide something].
Self-regulating attempts may well fail, due to the inherent conflict of interest in asking any organization to police itself. If the public becomes aware of this failure, an external, independent organization is often given the duty of policing them, sometimes with highly punitive measures taken against the organization. The results can be disastrous, such as a military with no external, independent oversight, which may commit human rights violations against the public. Not all businesses will voluntarily meet best practice standards, leaving some users exposed.
Governments may prefer to allow an industry to regulate itself but maintain a watching brief over the effectiveness of self-regulation and be willing to introduce external regulation if necessary. For example, in the UK, the House of Commons Public Accounts Committee in 2015 investigated the role of large accountancy firms in relation to tax avoidance and argued that "Government needs to take a more active role in regulating the tax industry, as it evidently cannot be trusted to regulate itself".[2]
When directly self-regulating, the organization directly monitors and punishes its own members. For example, many small organizations have the ability to remove any member by a vote of all members. Another common form is where the organization establishes an external policing organization. This organization is established, and controlled by, the parent organization, so cannot be considered independent, however. In another form, the organization sets up a committee or division for policing the remainder of the organization. The House Ethics Committee is an example in the United States government, while various police departments employ an Internal Affairs division to perform a similar function.
American Bar Association (ABA) formulates model ethical codes related to the legal profession. The ABA has 410,000 members.
Every state bar association in the U.S. is a self-policing organization.
The Direct Selling Association (DSA) works with the third-party Direct Selling Self-Regulatory Council (DSSRC) to establish and enforce guidance related to the direct-selling industry.[3]
Self-regulation is the process whereby an organization is asked, or volunteers, to monitor its own adherence to legal, ethical, or safety standards, rather than have an outside, independent agency such as a governmental entity monitor and enforce those standards. Self-regulation can have an effect on specifying existing guidelines or laws in certain contexts, foremost in the context of specific technical fields such as environmental protection, biotechnology, but also for the field of business and trade.[5] Self-regulatory measures such as codes of conduct can have important indirect legal relevance based on their effect of creating legal certainty and a waiver of liability in civil law, labor law and even criminal law.[6]
↑ W. Norman, Business Ethics as Self-Regulation: Why Principles that Ground Regulations Should Be Used to Ground Beyond-Compliance Norms as Well, J Bus Ethics, DOI 10.1007/s10551-011-1193-2.
↑ M. Dreyer, J. Erdmann, Ch. Rehmann-Sutter (eds.), Genetic Transparency? Ethical and social implications of Next Generation Human Genomics and Genetic Medicine, Brill-Rodopi, 2016, 223 et seq.
A profession is a field of work that has been successfully professionalized. It can be defined as a disciplined group of individuals, professionals, who adhere to ethical standards and who hold themselves out as, and are accepted by the public as possessing special knowledge and skills in a widely recognised body of learning derived from research, education and training at a high level, and who are prepared to apply this knowledge and exercise these skills in the interest of others.
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market manipulation.
Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. For example:
A conflict of interest (COI) is a situation in which a person or organization is involved in multiple interests, financial or otherwise, and serving one interest could involve working against another. Typically, this relates to situations in which the personal interest of an individual or organization might adversely affect a duty owed to make decisions for the benefit of a third party.
Legal ethics are principles of conduct that members of the legal profession are expected to observe in their practice. They are an outgrowth of the development of the legal profession itself.
The Municipal Securities Rulemaking Board (MSRB) is a United States self-regulatory financial organization that writes investor protection rules and other rules regulating broker-dealers and banks in the municipal securities market. This including tax-exempt and taxable municipal bonds, municipal notes, and other securities issued by states, cities, and counties or their agencies to help finance public projects or for other public policy purposes.
In general, compliance means conforming to a rule, such as a specification, policy, standard or law. Compliance has traditionally been explained by reference to the deterrence theory, according to which punishing a behavior will decrease the violations both by the wrongdoer and by others. This view has been supported by economic theory, which has framed punishment in terms of costs and has explained compliance in terms of a cost-benefit equilibrium. However, psychological research on motivation provides an alternative view: granting rewards or imposing fines for a certain behavior is a form of extrinsic motivation that weakens intrinsic motivation and ultimately undermines compliance.
Securities regulation in the United States is the field of U.S. law that covers transactions and other dealings with securities. The term is usually understood to include both federal and state-level regulation by governmental regulatory agencies, but sometimes may also encompass listing requirements of exchanges like the New York Stock Exchange and rules of self-regulatory organizations like the Financial Industry Regulatory Authority (FINRA).
A regulatory agency or independent agency is a government authority that is responsible for exercising autonomous dominion over some area of human activity in a licensing and regulating capacity.
A self-regulatory organization (SRO) is an organization that exercises some degree of regulatory authority over an industry or profession. The regulatory authority could exist in place of government regulation, or applied in addition to government regulation. The ability of an SRO to exercise regulatory authority does not necessarily derive from a grant of authority from the government.
An ethical bank, also known as a social, alternative, civic, or sustainable bank, is a bank concerned with the social and environmental impacts of its investments and loans. The ethical banking movement includes: ethical investment, impact investment, socially responsible investment, corporate social responsibility, and is also related to such movements as the fair trade movement, ethical consumerism, and social enterprise.
BBB National Programs, an independent non-profit organization that oversees more than a dozen national industry self-regulation programs that provide third-party accountability and dispute resolution services to companies, including outside and in-house counsel, consumers, and others in arenas such as privacy, advertising, data collection, child-directed marketing, and more. The Center for Industry Self-Regulation (CISR) is BBB National Programs' 501(c)(3) non-profit foundation. CISR supports responsible business leaders in developing fair, future-proof best practices, and the education of the public on the conditions necessary for industry self-regulation.
The Direct Selling Association (DSA) is a trade association in the United States that represents direct selling companies, primarily those that use multi-level marketing compensation plans. On behalf of its members' companies, the DSA engages in public relations and lobbying efforts against regulation of the multi-level marketing industry, and it funds political candidates through a political action committee.
Attorney misconduct is unethical or illegal conduct by an attorney. Attorney misconduct may include: conflict of interest, overbilling, false or misleading statements, knowingly pursuing frivolous and meritless lawsuits, concealing evidence, abandoning a client, failing to disclose all relevant facts, arguing a position while neglecting to disclose prior law which might counter the argument, or having sex with a client.
The Solicitors Regulation Authority (SRA) is the regulatory body for solicitors in England and Wales.
The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Association of Securities Dealers, Inc. (NASD) as well as to the member regulation, enforcement, and arbitration operations of the New York Stock Exchange. The U.S. government agency that acts as the ultimate regulator of the U.S. securities industry, including FINRA, is the U.S. Securities and Exchange Commission (SEC).
The Code of Practices for Television Broadcasters, also known as the Television Code, was a set of ethical standards adopted by the National Association of Broadcasters (NAB) of the United States for television programming from 1952 to 1983. The code was created to self-regulate the industry in hopes of avoiding a proposed government Advisory Board and satisfying parental concerns over violence and other matters. Prior to the Television Code, the 1935 NAB Code of Ethics for radio was applied to television but fewer than half of television stations subscribed to it; when the Television Code was first issued, two-thirds of stations became subscribers.
Mass media regulations are a form of media policy with rules enforced by the jurisdiction of law. Guidelines for media use differ across the world. This regulation, via law, rules or procedures, can have various goals, for example intervention to protect a stated "public interest", or encouraging competition and an effective media market, or establishing common technical standards.
The Independent Press Standards Organisation (IPSO) is the largest independent regulator of the newspaper and magazine industry in the UK. It was established on 8 September 2014 after the windup of the Press Complaints Commission (PCC), which had been the main industry regulator of the press in the United Kingdom since 1990.
The Media Industry Development Authority of Fiji (MIDA) was an independent statutory body that regulated mass media in Fiji. The Authority was established in June 2010 by the Fijian government under the Media Industry Development Decree 2010. It enforces media ethics which governs all media organizations in Fiji as well as regulating media content and implementing rules on advertising. In April 2023, the coalition government led by Prime Minister Sitiveni Rabuka voted to repeal the authority.
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